FTSE opens lower on commodity weakness

The FTSE 100 opened lower this morning as yesterday's weakness in commodity prices pushed markets lower around the world.

The Nikkei 225 finished 1.5% lower overnight, while the Dow closed 1% down yesterday evening. The FTSE 100 was 50 points lower this morning, down 0.8%, with the mining and oil companies to blame for the dip.

Specialist silver miner Fresnillo was the biggest faller among the blue-chips, down 4.7%, or by 66p, to £13.45.

Manoj Lodwa at ETX Capital said:

A volatile start for equities this morning as the FTSE dropped sharply on the open. With commodities having all but given up their recent gains, natural resource stocks are leading the market lower today. Traders will be keeping a very close eye on the raft of economic data from the US out later today.

Away from the commodity story, there was no shortage of other figures for investors to chew over.

BT issued final results which, if anything, slightly exceeded expectations at least in terms of the forecast.

Revenues were down 4% to just over £20bn, but EBITDA was up 4% to £5.8bn, and BT said it expects to exceed £6bn in EBITDA in 2012, ahead of the City's expectations.

Keith Bowman at Hargreaves Lansdown said:

The turnaround story at BT continues. The group's global services IT division has cut unprofitable contracts whilst pushing into Asia, while broadband customer numbers continue to be expanded, possibly aided by troubles at rivals such as Talk, Talk. Costs continue to be cut, while uncertainties surrounding the company's staff pension scheme have eased.

On the downside, overall revenues remain in decline, a position which at some point will need to be reversed, whilst the appropriate business model across the broader telecoms, media and technology arenas remains fluid and uncertain.

Nonetheless, the relatively new and home grown chief executive deserves credit for today's results. Cash flow, the core attraction for any telecoms company, has been boosted, a fact now underpinning the progressive dividend policy. As such, market consensus opinion has slowly moved from a strong hold to a buy.

3i issues numbers which impressed, the blue-chip leading the FTSE 100 leaderboard at 9:30. Its net asset value stood at 351p, it said, the shares rising almost 6% to 287p.

Bill Barnard of Evolution Securities said:

Investment and exits were both ahead of our expectations due to higher rolled up interest and the liquidation of the Debt Warehouse respectively. Realised gains were also slightly ahead of our forecast and we see that as positive as well. With Earnings growth and Imminent sale very strong as expected, the main negative is the very embarrassing £198m impairment of Enterprise. That said, after a rather downbeat pre-close, asset quality as a whole does appear to be better than expected.

Among the mid-caps Keller and Supergroup were leading the fallers.

Keller, a ground engineering specialist, fell after warning that its profits would fall 10% this year as a result of competition in the US, flooding in Australia and unrest in the Middle East and North Africa.

The shares were down 19% to 537p.

Supergroup meanwhile said sales had risen 61%, but that wasn't enough for the much-hyped retailer's investors, for whom only breakneck growth is good enough, the shares falling 17.5% to £12.98.

Nick Bubb of Arden Partners said:

The market was expecting some slowdown in Q4 for Retail from the super 92% sales growth in Q3, but "only" 39% is a big slowdown…SGP is blaming a blip in store openings and a delay in responding to the fine weather last month with summer ranges, but we don't think they should beat themselves up too much, as we estimate that there would still have been good, 10-15% LFL growth within that overall Retail sales figure (and most retailers would die for that).

He added that "When you are on a P/E of 35x, blips in trading will be punished."